China’s iron ore futures extended losses on Thursday as market sentiment remained bearish about a rise in near-term supply after Brazil’s Vale SA said it was set to reopen an iron ore mine.
The most-active iron ore contract for September delivery on the Dalian Commodity Exchange closed 0.9 percent lower at 620 yuan ($92.59) a tonne, adding to a 3 pct fall in the previous session.
Vale said on Tuesday that it expects to resume operations at the Brucutu mine, which has annual capacity of 30 million tonnes, within 72 hours.
Analysts and investors saw the news as bearish for near-term supply, as shipments from major miners in Australia are also resuming after recent disruptions from a tropical cyclone.
Combined iron ore shipments from Brazil and Australia increased by 2.82 million tonnes, or about 18 percent, last week as of April 14 to 18.86 million tonnes, according to data compiled by Mysteel consultancy.
However, analysts expect solid demand for the steel-making raw material amid supportive macroeconomic conditions.
“Downstream steel demand from manufacturing and construction sectors remains firm, which has contributed to the recovery in steel prices and margins,” said Hui Heng Tan, research analyst at Marex Spectron, in a note.
“Currency conditions remain supportive given the strength of importing countries which has lifted the purchasing power of end-users.”
China on Wednesday reported a steady 6.4 percent growth in its GDP in the first quarter, backed by improving industrial production and consumer demand.
But analysts warn it is premature to call it a sustainable turnaround, and further policy support will be needed to maintain momentum in the economy.
Benchmark Shanghai rebar prices dipped 1.9 percent to 3,710 yuan a tonne.
Dalian coking coal futures edged down 0.1 percent to 1,318 yuan, while coke slid 1.9 percent to 2,012 yuan.
Yaang Pipe Industry Co., Limited (www.yaang.com)